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Multiple sales channels yields diverse revenue streams and sales growth. But multiple channels makes effective inventory management especially complex. This is where multi-channel inventory management comes in.

Multi-Channel Inventory Management

multi-channel sales management

Growth of Multi-Channel Businesses

Inflow Inventory ManagementIn recent years, many companies have taken to selling their products on a variety of platforms, like retail and distribution. Or, they incorporate an ecommerce sales channel to complement their physical stores.  This adds diversity to their sales, while providing opportunities for revenue growth and deeper customer interactions. Business Insider recently revealed that businesses with more channels are more likely to engage their customers into making a purchase or trying out a new product.

What Is Multi-Channel Inventory Management?

Multi-channel Inventory Management is a system used by businesses for tracking and accounting for products that come from different sources or are kept in different locations. 

Let’s say you use a number of different channels for selling your product. For your online market, you might have your own website and also have partnerships with other online stores that carry your products. For offline customers, you might have a number of physical shops or retail outlets, and possibly even locations that serve bulk orders for wholesale customers.

Multi-Channel Inventory Management

Adds Complexity to Inventory Management

While more sales channels provides great opportunities to diversify revenue, it also increases the complexity of inventory tracking and accounting. Each channel may have its own particular requirements so the process of keeping track of them all gets even more complex.

If you have an efficient multi-channel inventory management system in place, you can maintain a centralized and highly accurate inventory count for all your items in all your outlets.

How It Differs From Single-Channel

Keeping track of inventory for a single-channel business is relatively simple. If you have only one retail outlet, you only have to monitor the products in that store so the process is actually very straightforward. There is no need to coordinate with other outlets or other channels so there should not be much of a problem.

In multi-channel businesses, managing inventory can be extremely arduous. Wholesale channels, for instance, do not generate a very high frequency of orders. These channels generate small order volume for large quantities per order. In comparison, the retail channels generate a constant flow of low-volume orders, frequently just one or two units per transaction.

Benefits of Multi-Channel Inventory Management

inventory management softwareIf you are considering adding additional sales channels to your business, or if you are already utilizing several sales platforms, you should consider adopting a uniform multi-channel inventory strategy. There are a number of cloud-based software applications now available, and many are tailored to specific industries or channel mix.

Of course, you also have to spend some time learning the proper methodology of multi-channel inventory management. Below I list some of the benefits that businesses enjoy from adopting multi-channel inventory management across their enterprise. 

1. Better Time Management

Any efficient multi-channel inventory management process is highly automated. Workers no longer need to manually sift through the inventory data from all sales channels channels (a highly laborious process). It’s hard to overstate this benefit, as an efficient policy will save countless working hours for your team.

2. Reduced Business Expenses

Along with the savings in time/energy, a proper multi-channel inventory management policy will save in costs. 

  • Reduced Staffing. You need less people counting and tracking inventory, as a proper inventory management system will eliminate a lot of the manual tasks.
  • Lower Software Costs. Yes, a software upgrade actually can save money, as modern inventory management solutions are stored in the cloud, eliminating costly upgrades and technicians on your team.  Despite having to pay a monthly fee, subscribing to a cloud-based solution is still much more cost-efficient than maintaining these systems in-house.

3. Accurate Inventory Data

Studies show that on average, systematic inventory counts are only 63% accurate for the retail industry. The 37% of errors is the result of shrinkage, damaged product, customer returns, or general errors in processing transactions.  Inaccurate inventory data can be quite costly. According to Shopify research, inventory mismanagement problems contribute to massive costs including $471 billion in overstocks, $634 billion in out-of-stock items, and $642 billion in preventable returns. Much of this could have been avoided by deploying consistent inventory management processes complemented with the appropriate software.

4. Integrate Data Across Locations

Effective multi-channel inventory management will harmonize inventory data across all channels – As soon as a customer purchases an item at the retail channel, the enterprise inventory count is updated to reflect the transaction. This prevents “over-selling” of product – Meaning, if one channel consumes your entire stock of an item, this item is flagged as ‘out of stock’ for the remaining channels.

One of the pitfalls with multiple sales channels is that it is quite easy to process sales orders for products for which you have no inventory. By harmonizing data across locations, you can avoid the embarrassing error of accidentally selling an out-of-stock product on your website.

5. Spot Product Trends

With the data analysis features that come with most inventory management software, you can easily identify product trends based on the sales data and the movement of items in your inventory. With this information, you will have the advantage of predicting which items will soon have a higher demand and require a higher volume in stock. Also, you can offer product promotions specifically targeted to certain customers, based on the information presented by the software.

6. Build Brand With an Online Presence

When using a multi-channel inventory management system, you will see exactly how each of your products moves. You will see which customers buy which products, or how often such companies place orders for such items, and so on. Armed with this data, you can strategically position your business online in order to establish a better reputation.

An Example: Apparel Business

apparel industry inventory managementA college student begins a t-shirt printing business. Friends from the university and the community placed single orders for themselves or to give away as gifts. This is a classic definition of a single channel business, as he only fulfilled orders from a single retail location. 

However, he soon expanded his business to include an online sales channel. He posted ads for the shirts on online stores like eBay and Amazon. Eventually, he added additional retail outlet locations and began fulfilling wholesale orders. 

If you have been keeping track, he now has at least five sales channels, including both retail and wholesale customers. With this diversity in sales channels, he deployed an efficient multi-channel inventory management system to help him with keeping track of inventory.

With the software in place, he is able to monitor which shirt designs are the best-sellers so he always makes sure those are in stock. Also, the system lets him know which sizes and which colors are more in demand so he makes sure to never run out of these as well.


Multi-channel inventory management is a vital tool for businesses engaging in multiple sales channels or platforms. It makes for a simpler and better-integrated tracking and accounting of inventory. Among the key benefits that businesses can get from multi-channel inventory management are better time management, reduced expenses, increased accuracy in inventory data, identification of product trends and boosted online reputation.

About the Author

Bryce Bowman

Bryce Bowman

Bryce has over two decades of leadership roles in finance and supply chain. In his supply chain roles, he built reporting for multi-billion dollar supply chains. As Division CFO, Bryce established reporting and controls for a multinational industrial business. Bryce now helps companies solve inventory issues through better planning.

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